Global Water Resources, Inc. (GWRS)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 revenue rose 5.4% to $14.24M, while diluted EPS was $0.06 (down from $0.07 YoY); adjusted EBITDA increased 2.1% to $6.94M .
• The quarter modestly beat Wall Street consensus: EPS $0.06 vs $0.05 and revenue $14.24M vs $14.20M; only one estimate was available, so signal is limited (both consensus values from S&P Global)*.
• Strategic catalysts advanced: Tucson acquisition (seven water systems; ~2,200 connections; ~$7.7M rate base at ~1.05x; ~$1.5M annual revenue) closed in July; SR-347 expansion fully funded; and Arizona’s Ag-to-Urban program enacted, bolstering long-term demand in Pinal County .
• Near-term profitability headwinds persist from higher depreciation and O&M/G&A costs tied to capital investments and staffing, but regulatory progress (Farmers’ ~$1.1M rate increase, Santa Cruz/Palo Verde ~$6.5M net annual revenue request) and organic connection growth underpin the earnings trajectory into mid-2026 .

What Went Well and What Went Wrong

What Went Well

• Organic growth and pricing supported top-line: total revenue +5.4% YoY to $14.24M, driven by active connections (+3.8% to 65,639), consumption (+8.2% to 1.2B gallons), and rate increases (Saguaro, Farmers) .
• Regulatory and policy wins: SR-347 included in ADOT’s $11.6B five-year plan, expected to spur development; Ag-to-Urban legislation enables conversion from agricultural to municipal use, supporting housing and aquifer sustainability; CEO: “a major milestone for the region and a catalyst for sustainable growth” .
• Strategic M&A closed: Tucson acquisition adds ~2,200 connections at ~1.05x rate base multiple; COO highlights proximity to existing systems and smart-meter AMI plans to drive efficiency and customer savings .

What Went Wrong

• Profitability compression: net income fell to $1.61M from $1.73M; EPS $0.06 vs $0.07; depreciation and amortization rose $321k YoY on higher depreciable assets; O&M and G&A increased ~$432k and ~$155k respectively .
• Macro headwinds: single-family permits declined (Phoenix MSA -14% YoY in Q2; City of Maricopa -24% YTD), with management citing tariffs and stubborn interest rates as drivers of pullback .
• Southwest Plant bill credits of ~$0.2M partially offset wastewater revenue growth; Buckeye growth premiums variability impacted other income YoY .

Financial Results

Summary financials vs prior year and prior quarter

Note: Asterisked values retrieved from S&P Global.

Segment revenue breakdown

KPIs

Actuals vs consensus (Q2 2025)

Note: Consensus values retrieved from S&P Global. Only one estimate was available, limiting signal strength.*

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO on growth drivers: “In Q2, our top-line growth was primarily driven by organic connection growth, increased consumption and successful rate case strategy.” He highlighted SR-347 funding and Ag-to-Urban legislation as catalysts for sustainable growth, and noted seeking ~$6.5M net annual revenue in the Pinal County rate case with completion mid-2026 .
• CFO on cost dynamics: “Depreciation and amortization [rose] $321,000... attributable to a 16.5% increase in depreciable fixed assets... Personnel costs [rose] $223,000... staffing increases related to the Tucson acquisition... Other O&M and G&A costs increased by approximately $305,000” .
• COO on Tucson integration: Proximity to existing systems enables economies of scale; adopted Tucson’s rate structure with +5% in 2025 and +5% in 2026; Diamond Bell has ~1,400 platted lots for future organic growth .

Q&A Highlights

• The Q2 2025 transcript did not include an analyst Q&A segment; no additional guidance clarifications or tone shifts were recorded .

Estimates Context

• GWRS modestly beat consensus EPS and revenue in Q2 2025: EPS $0.06 vs $0.05 and revenue $14.24M vs $14.20M; however, only one estimate was available, reducing interpretability of the beat (consensus values from S&P Global)*.
• With depreciation stepping up and staged rate relief underway (Farmers now in effect; Santa Cruz/Palo Verde pending), models may need to reflect higher D&A run-rate in the near term and phased revenue uplift into mid-2026 .

Key Takeaways for Investors

• Modest beat with defensible drivers: organic connections/consumption and rate actions; EPS $0.06 vs $0.05 consensus; revenue $14.24M vs $14.20M (S&P Global)* .
• Near-term margin pressure should ease as rate cases flow: higher D&A from elevated capex weighed on EPS; staged Farmers’ increases and the pending Pinal County case (~$6.5M request) support 2026 earnings cadence .
• Strategic footprint expands: Tucson adds ~2,200 connections and ~1.5M annual revenue, with AMI rollout and proximity synergies likely to lower costs over time .
• Macro watch: permits softened on tariffs/interest rates; multifamily/commercial/industrial pipeline and SR‑347 funding provide offsets to single-family volatility .
• Policy tailwinds: Ag‑to‑Urban program materially expands long-term water availability for development in Phoenix/Pinal AMAs, directly benefiting GWRS service areas .
• Dividend steady; liquidity strengthened: monthly $0.02533 maintained; revolver extended/increased to $20M, supporting capex and integration .
• Trading setup: expect narrative to center on regulatory milestones (staff recommendations 10/01/2025), Tucson integration updates, and evolving macro; catalysts include SR‑347 timeline and Ag‑to‑Urban implementation .

Footnote: Consensus and asterisked values retrieved from S&P Global.*